Feb 3, 2009

Business - Q&A;Rajeev Kapoor, president & CEO, Fiat India Automobiles

talian automaker Fiat introduced the Linea in 2007 as a small family car for the markets of Eastern Europe, Latin America and Middle East. In India, Fiat India Automobiles (a 50-50 joint venture between Fiat Group Automobiles SpA and Tata Motors), launched the Linea sedan in January 2009 after spending much of last year picking up rave reviews across the markets it was launched in. Most recently, it won the AUTOBEST 2008 Award, where a jury from 15 East European countries rated it over many of its European, Japanese and Korean competitors. But can the Linea pump up the volumes for Fiat in India? And refurbish the company’s image—bunged up as it were by the lackadaisical performance of its earlier models, be it Padmini, Uno, Sienna, Petra or the Palio—along the way? Rajeev Kapoor, president & CEO, Fiat India Automobiles, is confident the Linea would help the beleaguered automaker turn its fortunes in India 180 degrees. He spoke at length to FE’s Malabika Sarkar about the company’s mistakes, the strategy it is going to adopt to establish a strong presence in the country and of course, the Linea.A new launch in a new year, but not exactly the best of times. The economy has hit a bad patch and car sales are slowing down. Why did you chose this particular time for the Linea launch? How will you persuade consumers to get out and buy your product?We have not chosen this period. When we are developing a product, the planning starts a long time before that, say one-and-a-half-years before. We cannot stop the process in between because of a downturn. We had planned the launch for the month of December (2008) but it was pushed back to January (2009) because of the terror strike in Mumbai.Of course, in times of economic slowdown people become extremely choosy. They want to purchase a product that is a combination of good price, comfort, safety and beauty. In that sense, this is the right opportunity to sell a product that embodies all this.Fiat is a wonderful brand. What bogged you down in India? Was it marketing; was it perception? What are the problems you would work on?Fiat has had its own share of problems, but all that was five to six years ago. It couldn’t market the product offered. The after-sales service and the spare-parts support was not up to the mark. But things have changed now, not only in India but also worldwide. Fiat today is a very vibrant company. It is doing well across all segments and in every market. The same story is going to be repeated in India. We are not simply launching a new product; we will make sure that the spare availability, the technology that went into the product, and the quality—everything is perfect.Looking back, what are the things you would have done differently given a second chance?We have started working on some key areas to establish a strong industry presence. We are using our partner to set up the dealerships. We will use its strength to reach across India. We have decided to pick up only those dealerships that are capable of selling our cars. We will ensure that they hire people who would be technically trained to handle our cars. We will make sure that spare parts are available and they are competitively priced. The technology and services should also be good and hassle-free.Would you continue to use Tata’s service network or do you plan to have Fiat-owned service centres?No, we do not plan to open any Fiat-owned service centres. The motive of this joint venture and collaborative effort is to use our partner’s strength in this area. Establishing a dealership is an expensive proposition. Today it is not possible to set up a dealership the way Tata and other people have done. The best model is to use a dealership network that exists and as you go forward, you will see more of it happening in the market.What is your strategy to take care of service and spare parts availability in India? Can you give some indications.The strategy is to benchmark the prices across brands. The Linea is going to be highly localised; therefore we will ensure that the parts are also easy to obtain. Customers can now go to the dealers to get exclusive experience of an environment that is very European.Within the Tata network, we have done exclusive training of the technical people. We have well-trained people for customer interfacing. And we have exclusive set ups for the service of Fiat cars. In other words, we are trying to take care of all the loose ends so as to enhance customer experience.The general perception is that Fiat cars are not fuel-efficient. How will you address this issue? What technologies are you using to augment fuel efficiency?You said it. It is just a perception that persists in people’s minds. You compare the latest generation cars—the mileage is almost the same. You may end up with a kilometre here and there, but that is because of so many other factors—such as the condition of the road on which you are driving, whether you have the air-conditioner on or not, whether you are doing hill driving or plain driving.These are the many things on which the mileage of a car depends. And all the new generation cars are almost on the same scale in this respect. See, people talk about just two things—mileage and spare parts. Let me tell you that today Fiat parts are available all over and they are competitive both in terms of price and quality.What would be your communication strategy for 2009? Mass media or below-the-line?Our marketing strategy would be to encourage more and more potential car buyers to go out and drive our car.Our ads are very different from the regular auto ads that you see. We are going to maintain the same standards. We are looking at print medium and the outdoors aggressively. Television commercials and the internet are also part of the plan. We already have a dedicated website, www.fiatlinea.com.One more issue with Fiat cars. You seem to be launching your models in India long after their global launches. Your competitors, say, a Hyundai or a Toyota, would do it differently. They have made a virtue of, to use an industry parlance, simul-launch.We were actually waiting to have a local manufacturing base, so that we can launch it from here to price it economically. We are also trying to set up a strong manufacturing base. India is an important market. It is a market that is growing and highly competitive.You have showcased the Linea sedan, 500 and Grande Punto at the Auto Expo 2008. What was the feedback for the 500 like, and when do you plan to launch Grande Punto in the country?Oh, it was fantastic. We already sold 56 cars. It is driven by some of the best faces and the reviews and feedback are excellent. We plan to launch the Punto in the second half of this year.